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Exposing the true costs of fossil fuelsThu, 15 Feb 2018 17:52:26 +0000en-UShourly1http://wordpress.org/?v=4.3Fossil Fuel Finance at the Multilateral Development Banks: The Low-Hanging Fruit of Paris Compliancehttp://priceofoil.org/2017/05/24/fossil-fuel-finance-mdbs-paris/
http://priceofoil.org/2017/05/24/fossil-fuel-finance-mdbs-paris/#commentsWed, 24 May 2017 23:11:56 +0000http://priceofoil.org/?p=25813A new analysis finds that six major multilateral development banks provided over $7 billion in public financing for fossil fuels in 2015, and over $83 billion in financing for fossil fuels from 2008 to 2015, despite public claims of the urgent need for action on climate.

In December of 2015, in the Paris Agreement on climate change, governments agreed to hold the increase in global average temperature to well below 2°C, and strive to limit it to 1.5°C. Governments further included in the Paris Agreement the objective of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

And in June 2015, G7 governments highlighted the role of multilateral development banks in delivering climate finance: “We recognize the potential of multilateral development banks (MDBs) in delivering climate finance and helping countries transition to low carbon economies. We call on MDBs to use to the fullest extent possible their balance sheets and their capacity to mobilize other partners in support of country-led programs to meet this goal.”

Yet a new analysis finds that six major multilateral development banks – the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, and World Bank Group – provided over $7 billion in public financing for fossil fuels in 2015, and over $83 billion in financing for fossil fuels from 2008 to 2015.

From 2008 to 2015, 30% of multilateral development bank (MDB) energy financing went to fossil fuels, while just 25% went to clean energy. In 2015, despite increasing awareness and stated concern over climate change, 22% of multilateral development bank energy financing still went to fossil fuels. Concerningly, there is no clear trajectory in MDB finance for fossil fuels between 2011 and 2015.

Recent analysis indicates that the potential carbon emissions from reserves of oil, gas, and coal in the world’s already-operating fields and mines would take us beyond 2°C of warming, making it more important that committed governments show leadership. MDB finance represents an extremely important slice of total global investment, and governments can signal bold, global action on climate solutions by pushing to end fossil fuel finance at multilateral institutions as well as at their own bilateral public finance institutions.

Note: To view the dataset correctly, you must enable the “1904 date system” for this workbook

Note: This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0). If using the finance data, please attribute as being from Oil Change International’s Shift the Subsidies Database.

Every year, federal and provincial government pay billions in hand-outs to Canada’s coal, oil and gas companies, undermining climate action in Canada. Fossil fuel subsidies to producers total $3.3 billion annually, which amounts to paying polluters $19/tonne to pollute.

Canada’s fossil fuel subsidies drastically undercut the goal of the pan-Canadian carbon price that Prime Minister Justin Trudeau will introduce in 2018. It’s time to stop these harmful and counter-productive subsidies.

Governments have a limited pool of public funds that they can invest in other countries, often in an effort to bring sorely needed energy resources to places without reliable energy access. Unfortunately, these investments often take the form of coal-fired power plants and coal mines, ultimately damaging the air, water, public health, and environment of developing nations under the guise of bringing energy. The costs and life spans of coal projects can stretch for decades, trapping developing nations with incredibly carbon-intensive energy mixes.

It is time to turn this tide toward sustainable, profitable clean energy projects, especially in light of the Paris agreement, which went into force on November 4, 2016. The agreement calls for shifting trillions of investment dollars toward low-emission, climate-resilient development. The world must use its relatively small pool of public finance tools more prudently to catalyze that shift.

Just a few nations within the Group of 20 (G20) account for the vast majority of international coal finance. The export credits used to finance coal mainly benefit businesses in the home countries rather than in the recipient countries. The emerging economies are then left to grapple with the financial, public health, and environmental impacts.

Building on our earlier reports – “Under the Rug” (June 2015) and “Swept Under the Rug” (May 2016) – this report and accompanying database provide a window into coal projects financed by G20 countries.

A handful of wealthy countries are still funding fossil fuels instead of climate action. Collectively, Australia, Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States are spending:

3.6 times more public money to prop up fossil fuel companies than they’re giving to developing countries to address climate change ($66.7 billion vs. $18.5 billion)

2.6 times more public money to prop up fossil fuel companies than all countries are spending to help developing countries address climate change ($66.7 billion to $25.5 billion)

15.5 times more public money to prop up fossil fuel companies than all countries are spending to help developing countries adaptto the impacts of climate change ($66.7 billion to $4.3 billion)

Rich countries’ finance for fossil fuels is over 15 times global support for climate adaptation in developing countries.

Financial Support for Fossil Fuels Greatly Outweighs Climate Finance

In the Paris Agreement, governments committed to a long term goal of limiting global warming to “well-below 2ºC” and striving to limit the temperature increase to 1.5?C above pre-industrial levels. According to a recent report from Oil Change International, the potential carbon emissions from the oil, gas, and coal in the world’s currently operating fields and mines would take us beyond 2°C of warming, while the reserves in currently operating oil and gas fields alone, even with no coal, would take the world beyond 1.5°C. In order to stay within climate limits, no new fossil fuel extraction or transportation infrastructure should be built.

This infographic clearly demonstrates that governments’ financial support for fossil fuel production not only continues at extremely high levels – but that it is also greatly outpacing support for climate action in developing countries. When pressed to provide more resources to help developing countries reduce their climate pollution and to build resilience against the impacts of climate change, wealthier countries often say that the “cupboards are bare;” there’s just not enough public money to go around. Yet these same governments are spending tens of billions of dollars in public money to expand fossil fuel production every year.

The analysis compares the amount of government support for fossil fuel production (including subsidies to oil, gas, and coal companies and public finance for fossil fuel infrastructure) from a select set of countries, to the amount those same countries have self-reported in public climate finance. Figures for both amounts are the annual average over the years 2013 and 2014.

The countries included in this analysis are those that are both:

(a) G20 members, and so have pledged to end fossil fuel subsidies under the G20 in 2009; and

(b) Annex II countries under the United Nations Framework Convention on Climate Change, giving them a clear obligation to contribute climate finance for developing countries.

Given that these countries are obligated to both eliminate their fossil fuel subsidies and also to provide climate finance, they were chosen to illustrate the fact that vast sums of public money are still being spent on fossil fuel production, taking us in the opposite direction of the 1.5ºC and 2ºC climate limits agreed in Paris.

Government support for fossil fuel production also runs contrary Article 2(c) of the Paris Agreement, which identifies one of the agreement’s objectives as, “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

Data Sources:

Data on subsidies and public finance for fossil fuel production comes from the Overseas Development Institute and Oil Change International report “Empty Promises: G20 subsidies to oil, gas and coal production.” Note that the subsidy figures are highly conservative. They do not include subsidies to fossil fuel consumers – only to fossil fuel producers; nor do the figures include investment in fossil fuel production by state-owned enterprise.

Data on climate finance is self-reported by governments, taken from the UNFCCC Second Biennial Reports, in the biennial reporting common tabular format (BR2 CTF). These submissions are public and available on the UNFCCC website. These self-reported figures may be overestimates, making this analysis more conservative. For example, Japan’s self-reported climate finance likely includes finance for coal-fired power plants, which they consider to be “high-efficiency” and thus a climate solution, a position which was strongly challenged by an analysis conducted by Ecofys earlier this year.

]]>http://priceofoil.org/2016/11/15/infographic-governments-funding-fossils-over-climate-finance/feed/0A Convenient Lie: Why Fossil Fuel Supply Matters for the Climatehttp://priceofoil.org/2015/09/03/a-convenient-lie/
http://priceofoil.org/2015/09/03/a-convenient-lie/#commentsThu, 03 Sep 2015 18:31:17 +0000http://priceofoil.org/?p=21300Over the past week, virtually every article on the President’s trip to Alaska to highlight the impacts of climate change, has in the next breath mentioned the President’s approval of Shell’s arctic drilling. The allegation made vocally by the environmental community is that these two things are deeply contradictory, and blatantly hypocritical. It’s an allegation...Continue reading 'A Convenient Lie: Why Fossil Fuel Supply Matters for the Climate'.

This is not a new discussion. Since the Keystone XL campaign began to pick up steam and support in the summer of 2011, Very Serious People in Washington energy & climate circles have dismissed the focus on supply side infrastructure as “futile”, “pointless” and “lacks empirical foundation”.

With Shell in the Arctic, the scale and volume of the blowback from the environmental community has clearly caught the Administration flat footed. When confronted, they usually first mumble something about highest standards (which is completely irrelevant to the climate argument) but if pressed, the Administration and its defenders invoke a sober, scolding tone to explain:

1) We need oil and we will need oil for a long time. While we’re all concerned about climate, we’re still going to need oil and gas in the future and we might as well make as much of it as possible right here at home.

Together, these two arguments form what we can think of as the Convenient Lie that we can be serious about fighting climate change and also approve virtually all new fossil fuel infrastructure in the U.S. It’s the Convenient Lie that keeps us from dealing with the Inconvenient Truth.

This is indeed a very convenient argument for politicians who are getting increasingly stuck between the rock of increasing public concern about climate change and the hard place of oil industry political power.

That doesn’t make it right though. To start with, its quite rich to hear defenders of Arctic drilling talk about making as much oil as possible “here at home”, while exporting record amounts of crude and products and considering actually lifting the crude export ban. Ending dependence on “foreign” oil polls well, but everyone serious on all sides knows the oil market is global, and that anyone who is selling energy independence from more drilling is really just spinning. The only way to reduce dependence on foreign oil is to reduce dependence on oil – period.

That said, there are several key points that argue strongly that focusing on the supply side is an integral part of any climate strategy.

1) In general, supply side campaigns build political power. It is undeniable that supply-side campaign work has galvanized a growing climate justice movement in ways demand-side policy advocacy work has not been able to do. There is value in an approach that is able to energize activists, as laid out well by David Roberts. Power flows from money and people, and we all know which we have and which the industry has. We need more people.

The supply-side campaigns against pipelines and other infrastructure help to identify, display, symbolize and strengthen a movement calling for action on climate change to both stop the expansion of fossil fuel supplies as well as work towards solutions to address demand for such fuels.

Supply side campaigns connect people with places, and with a struggle that many people see in other ways between corporate power and people power. People seem to understand quite clearly that Congress is broken and corrupt – so it is not a major surprise that people gravitate towards campaigns that do not revolve around legislative theories of change.

2) The fundamental analytical reason to focus on supply side expansion is the danger of carbon lock-in. The vast majority of capital expenditure in the oil industry is up front, in the exploration and development phase. This is particularly true of expensive high carbon resources such as the tar sands, Arctic oil, and deepwater offshore.

The oil industry, and particularly the North American oil industry, has been undergoing an exploration boom since 2011. The chart below, illustrates the huge growth in daily global supply capacity that the industry is currently building out.

While it may be that low oil prices slow this trend somewhat, the overall direction still remains problematic. Once offshore oil platforms, pipelines and other major supply infrastructure is put in place, the marginal cost of producing each barrel of oil drops to the operating cost – which is typically quite cheap. Once these initial investments are made, an over-production of oil beyond climate limits becomes much more likely, because the producers will seek to recoup their massive investments by producing as much as possible, even if their profit levels are less than expected, or indeed, simply to limit their losses.

Furthermore, since new supplies would tend to decrease prices and increase global consumption, this over-investment could therefore lead to a net increase in global CO2 emissions.

In short, almost the only time it is possible to stop oil projects is before they have started producing. This is the area that current supply side campaigns are effective in – by stopping output before it starts, rather than by reducing existing production.

In the case of the tar sands campaign, the objective has always been to limit production to levels that are at or below levels consistent with the IEA’s 450ppm scenario. That level is roughly 3 mbpd of tar sands production, as shown in the chart below.

Basically, EIA’s reference case scenario – their baseline – is a 5 degree future – aka climate disaster. The Obama Administration, deep in its approvals for Arctic drilling, points to this scenario to justify the supposed “need” for Arctic oil. So, pretty much anytime you hear someone say we will “need” Arctic (or almost any new) oil, insert the words “in a nightmarish future” at the end of the phrase. That should help clarify the issue.

Will we need some oil even in a safe climate future in 2040? Yes, of course – some, although less is definitely better. Will we need that expensive, high carbon, risky oil? Almost certainly not. If you are aiming for a safe climate future you will have to leave oil in the ground – and therefore starting with the Arctic (and tar sands) makes the most sense, as was argued in Nature last year.

As a side note – it is a concerning thing that our nation’s preeminent energy forecaster, the Energy Information Administration, a) is so often totally wrong and b) does not actually produce a 450ppm or 2 degree Celsius “safe climate” forecast. This is the stated national and international goal of our climate policy. Seems like we should at least produce scenarios and models that help us to achieve that goal, and that we could then measure the impact of any particular policy or project against the future we actually want. Call me crazy.

This argument – while it has been conventional wisdom for most of the last decade – would seem to have been well and truly rebutted over the last year by facts – i.e. the refusal of Saudi Arabia to restrict production to moderate prices. In a world where major oil producers are seemingly more concerned about preserving market share instead of price, this just doesn’t work anymore, if it ever did. At the very least, the last year makes it clear that supply reduction by other producers can’t be counted on to balance production, or reduce emissions.

Regardless of whether or not OPEC and Saudi Arabia decide to change policies and reduce production (and at some point, they might), it is also worth asking: is it a good idea to leave climate policy in the U.S. to OPEC? The only way for the U.S. to be sure that emissions are reduced is to both reduce our own consumption, and to produce less fossil fuels ourselves. This would seem to be blindingly obvious, but somehow, buried under a blizzard of industry funded studies, it has become less so.

Supply side leakage was never an immutable law of economics, and in fact that is not how “markets and prices work” in the global oil market. Supply side leakage was a result of market manipulation by a cartel that still controls enough oil production to significantly manipulate the market whenever it chooses. OPEC no longer perceives it in their interests to pursue that strategy, and this change exposes this very convenient lie behind increased US oil production.

The shift in the oil markets over the last year means that the idea that increased U.S. oil production is not in conflict with climate protection is not much more than wishful thinking. And that means that activists, advocates, and policy makers who are concerned about climate need to pay close attention to all the new sources of carbon and pieces of fossil fuel producing infrastructure being brought online in North America today. Ten or twenty or thirty years from now, they will still be transporting, producing, and emitting, and they will be much, much harder to stop.

NOTE: This post was edited on September 7th, when the last chart was updated to show Global Oil Supply in the EIA Reference Case vs. IEA’s 450 scenario. Originally the chart showed the difference in emissions between the two scenarios. Both charts appear in the Arctic report, as mentioned.

]]>http://priceofoil.org/2015/09/03/a-convenient-lie/feed/7Counting the carbon kept in the groundhttp://priceofoil.org/2014/11/06/counting-carbon-kept-ground/
http://priceofoil.org/2014/11/06/counting-carbon-kept-ground/#commentsThu, 06 Nov 2014 17:03:15 +0000http://priceofoil.org/?p=18668A graphic published today by Oil Change International shows the carbon left in the ground in cancelled tar sands projects and the potential impact of continued action to stop tar sands pipelines.

The declining profitability of tar sands production has led to lower investment forecasts and the cancellation of three major projects, with further cancellations looking increasingly likely.

In the report, we calculate the amount of tar sands bitumen and associated carbon dioxide kept in the ground via the cancellation of these projects (0.2 billion tonnes to 2030 with 2.6 billion tonnes more over the potential lifetime of the projects). We also model how much tar sands production would be curtailed if all proposed pipeline projects are stopped, projecting the curtailed production and emissions out to 2030 (4.1 billion tonnes of CO2). In total, 4.3 billion tonnes has been saved to 2030 and a total of 6.9 billion tonnes if including the lifetime production from the cancelled projects.

Now we have published the chart below showing these emissions savings against those of key climate policies of the Obama Administration.

Should the emissions saved from demand-side policies such as vehicle efficiency standards (CAFE) and power plant carbon rules be compared to those saved by supply-side changes such as the cancellation of oil production projects? We, and others such as the Stockholm Environment Institute, believe they should be, although it is important to understand how these approaches differ.

Both approaches depend on assumptions – the question is which assumptions do you prefer? The projection of emissions savings from demand-side measures, such as vehicle efficiency standards, depends on the full implementation of those policies and is vulnerable to regulatory weakness, industry intervention, legal challenges or even policy changes over the time period -for example, a future administration or Congress may reverse or deemphasize these policies. Therefore, these are estimates of the maximum likely emissions reductions.

Estimates of savings from cancelled projects assume that the economics of these projects will not change sufficiently to restart them. By counting this carbon as ‘avoided’, Oil Change International is assuming that the industry will not succeed in improving the economics of these projects and that the climate movement will continue to have a material impact on tar sands production for the foreseeable future. In other words, do you want to count on public concern and activism around climate growing, or do you want to count on politicians successfully taking action on climate?

Demand projection models are approximate but we know how much oil is buried below a cancelled project. Improving efficiency and switching to clean energy production is absolutely crucial. But there are uncertainties in how policy measures will actually impact public behavior. One such factor is the behavioral response to more efficient energy use, which may include increased energy consuming activity such as driving more as the cost of driving goes down. This could reduce the actual emissions savings estimated for certain measures such as CAFE.

However, if a tar sands mining project does not go ahead then the bitumen that would have been extracted by that project will remain underground. The emissions that would have been released to the atmosphere by extracting, processing and consuming that bitumen can with a high degree of certainty be considered to have been kept in the ground with the bitumen.

While it might be argued that some comparable amount of crude oil will simply be extracted elsewhere to make up for cancelled production, it is far from clear that barrel-for-barrel this is actually the case. The argument assumes a predictable level of demand and supply when in reality both are in flux due to a number of factors.

On the supply side, this can be seen most clearly in the current behavior of the oil markets. Until recently, most oil analysts expected Saudi Arabia and the rest of OPEC to reduce supply if prices fell below roughly $90/barrel.[1]

However, thus far Saudi Arabia has refused to cut production preferring instead to let prices fall and maintain market share. The key here is that oil markets are unpredictable and we cannot make assumptions based on either the past or standard economics.

This is because the future market share of emerging technologies that reduce oil demand – whether they are hybrid vehicles that reduce gas mileage, electric vehicles that eliminate it or more sustainable biofuels that can directly replace oil in existing vehicles – is repeatedly surpassing most forecasts. Plug-in hybrid and electric vehicles for example, appear to be gaining market share more quickly than hybrid gasoline vehicles did.

The fact is that the future demand for oil is a matter of speculation – not a statement of fact. Agencies tasked with making forecasts have highly sophisticated models for making informed predictions but these are often inaccurate and are frequently adjusted as circumstances, particularly technology, changes. According to its own review, the EIA has overestimated crude oil consumption in nearly 69% of its projections since 1994. In other words, it overestimates oil demand more times than it underestimates it.

The math of extraction based carbon accounting and fossil fuel supply is much simpler. The world’s leading climate scientists have calculated how much carbon can be emitted to the atmosphere before average global temperature rise will exceed 2 degrees Celsius (3.6 Fahrenheit), beyond which climate change may become irreversible and catastrophic. They have also calculated that to avoid surpassing that limit, less than a third of existing proven fossil fuel reserves can be exploited. Therefore, most of these reserves must be left in the ground.

Exactly which reserves, and whose, to leave in the ground, is of course the sticking point. But it’s hard to believe that those reserves that are most expensive and carbon intensive such as the tar sands and the Arctic would not be on that list.

Stopping tar sands projects and leaving billions of barrels of this carbon intensive form of crude oil in the ground is imperative. So too is counting the carbon sequestered whenever a tar sands project is cancelled.

]]>http://priceofoil.org/2014/11/06/counting-carbon-kept-ground/feed/0Worried about a 4-degree world? Then stop digging!http://priceofoil.org/2014/04/09/worried-4-degree-world-stop-digging/
http://priceofoil.org/2014/04/09/worried-4-degree-world-stop-digging/#commentsWed, 09 Apr 2014 12:51:35 +0000http://priceofoil.org/?p=16552World Bank Group finance for projects that included fossil fuel exploration was highest in FY2013, at nearly $1 billion out of $2.7 billion total for fossil fuel projects in 2013.

]]>It’s good advice: when you find yourself in a hole, you stop digging. The same should hold true now when the world finds itself headed for a 4-degree temperature increase: it’s time to stop digging – for fossil fuels.

Financing for fossil fuels at the major international financial institutions overall appears to be on a slight downward trend. From 2008 to 2010 World Bank Group financing for oil, gas and coal averaged $4.7 billion a year, and from 2011 to 2013 financing averaged $2.3 billion annually.

But according to a new Oil Change International analysis, World Bank Group finance for projects that included fossil fuel exploration was highest in FY2013, at nearly $1 billion out of $2.7 billion total for fossil fuel projects that year.

The World Bank put out a landmark report in late 2012, outlining the terrible consequences if climate change continues unabated. World Bank Group President Jim Yong Kim said at the report’s release, “A 4 degree warmer world can, and must be, avoided – we need to hold warming below 2 degrees.”

Yet we know that the world’s ‘carbon budget’ – the amount of CO2 we can still emit if we are to meet the target of limiting warming to 2 degrees – is diminishing every year.

But in the last decade, the world’s commercially viable (‘proven’) fossil fuel reserves have increased: coal reserves have declined, but oil and gas reserves have more than made up for it.

And oil and gas companies spent $129 billion last year exploring for new reserves.

As it turns out, these companies’ exploration activities are being supported by international financial institutions – and in particular, the private sector arms of the World Bank Group: the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).

The major multilateral development banks financed almost $4.5 billion in projects that include exploration activities between 2008 and 2013, with the International Finance Corporation alone supporting $2.3 billion.

Support from these institutions, particularly in developing countries, decreases perceived risk and often leverages additional financing for exploration activities.

Of further importance to developing countries, this support from international financial institutions may cause projects that are financially risky in the long term because of climate change to become viable in the short term.

Current financial forecasts do not consider climate change risks, and consequently would put the world on track for a 6-degree temperature rise. Once regulators and financial markets wake up to the constraints posed by climate change, the cost curves for these carbon-intensive projects will rise, potentially creating stranded assets.

Former World Bank chief economist Lord Nicholas Stern has voiced strong concerns about the impact of this growing ‘carbon bubble,’ which threatens a financial crisis as the world wakes up to the realities of climate change.

These are not the energy production trajectories that the World Bank Group should be encouraging developing countries and emerging economies to follow.

If the World Bank Group is taking climate change as seriously as it says, then it must stop supporting exploration for fossil fuels – immediately – as a first step to phasing out the remaining fossil fuels in its portfolio.

]]>http://priceofoil.org/2014/04/09/worried-4-degree-world-stop-digging/feed/0Kerry’s State Department Ignored Obama’s Climate Action Planhttp://priceofoil.org/2014/02/17/kerrys-state-department-ignored-obamas-climate-action-plan/
http://priceofoil.org/2014/02/17/kerrys-state-department-ignored-obamas-climate-action-plan/#commentsMon, 17 Feb 2014 14:58:05 +0000http://priceofoil.org/?p=16180In 2009, President Obama made a commitment to reduce U.S. greenhouse gases by 17 percent by 2020. The Obama administration put this forward as the U.S. share of a global effort to limit climate change to no more than two degrees Celsius – the target scientists tell us may be safe. Achieving this target, which...Continue reading 'Kerry’s State Department Ignored Obama’s Climate Action Plan'.

]]>In 2009, President Obama made a commitment to reduce U.S. greenhouse gases by 17 percent by 2020. The Obama administration put this forward as the U.S. share of a global effort to limit climate change to no more than two degrees Celsius – the target scientists tell us may be safe. Achieving this target, which has been unanimously agreed on a global level, is central to the success of President Obama’s Climate Action Plan, announced in June of last year.

It is therefore shocking to realize that the State Department completely failed to take this target into account when evaluating the climate impacts of the Keystone XL pipeline.

The State Department’s Final Supplemental Environmental Impact Study (FSEIS) of the Keystone XL pipeline used three future U.S. energy scenarios developed by the Department of Energy. None of these scenarios modeled a world in which the United States meets its stated goal of limiting climate change to less than two degrees Celsius (3.6 F), despite the fact that even these flawed models revealed that the carbon impact of the pipeline could equal as much as 5.7 million cars each year.

In fact, all of the scenarios used by the State Department result in emissions that put us on a path to 6 degrees C (11 F) of global warming according to the International Energy Agency (IEA). IEA Chief Economist Fatih Birol described 6 degrees as nothing short of “a catastrophe for all of us.”

This failure to integrate the nation’s climate goals into environmental reviews seems to run deeper than the State Department. The flaw, it seems, extends at least to the way that the Department of Energy’s Energy Information Administration (EIA) models its future energy scenarios, which hasn’t changed at all to take the President’s Climate Action Plan into account.

The EIA does a remarkable job of monitoring and forecasting the vast energy supply and demand of the United States. But beyond simply measuring greenhouse gas emissions from America’s energy sector, the EIA does not provide a scenario of what America’s energy demand and supply should look like in an economy in which the United States achieves its climate goals.

By avoiding any consideration of climate safety, the State Department report is blindingly clear on one point, if only by implication: the Keystone XL tar sands pipeline is not compatible with a climate safe world.

President Obama was absolutely right to decide to evaluate the Keystone XL pipeline on its climate impact. In order to make that decision, and evaluate future infrastructure projects in an informed way, the President needs his Administration to evaluate projects on the basis of the nation’s climate goals.

At the very least, modeling what U.S. energy flows look like in a climate safe world should be one of the options presented to the Secretary of State and the President. Currently it is not.

While the State Department should have asked: “Will our efforts to meet climate objectives be hampered if we build Keystone XL?” the State Department’s report only manages: “In a future of inevitable catastrophic climate changes will Keystone XL make things significantly worse”? That’s like asking on an already sinking Titanic if it would sink even faster with yet another hole in the hull.

The good news is that although we can all see the iceberg ahead, there is in fact enough time to turn with hopefully only a few scrapes. Just. Apparently the crew needs to start believing that turning the rudder hard will make a difference.

-Barry Saxifrage, Christopher Hatch, Lorne Stockman and Stephen Kretzmann all contributed to this piece. For full details on the original analysis, go here.

]]>Alabama coal baron and conservative activist Shaun McCutcheon has a problem. He doesn’t feel that $123,200 buys him enough influence in Washington. He wants to spend more. A lot more.

McCutcheon, a big fan of the Supreme Court’s Citizens United decision, apparently feels that this existing aggregate federal campaign contribution limit is a restriction of his “right” to spend what he wants on politics.

Next Tuesday at the Supreme Court, shutdown willing, the Court will hear oral arguments in McCutcheon v. FEC. Already being called Citizens United 2 by a coalition of democracy, environmental, and labor activists, the case could enable a single wealthy donor, like McCutcheon, to contribute more than $3.6 million to the Democratic or Republican party’s candidates and party committees in a single election cycle.

Why does Shaun McCutcheon want to be able to spend more on elections? What does he want to do with the increased access and influence this will buy him in Washington? Likely much of the same thing he has been doing – advocate for his coal industry and peddle climate denial.

McCutcheon’s company, Coalmont Electrical Development, makes industrial electrical equipment that is used in coal mines. The coal industry is in trouble both in the United States and globally. Huge amounts of cheap natural gas from fracking has undercut coal, the price for coal has dropped, and the coal market is flooded with supply. All of this is against the backdrop of an increasing grassroots movement against coal, and scientific certainty and elite concerns about fossil fueled climate change.

McCutcheon understands the threat to his profits. Last year he tweeted this:

McCutcheon retweeted a link to a Singer article last year that claimed that “The good news is that science evidence [sic] has made it quite clear that the human contribution to a possible global warming is minor; in fact it cannot even be identified in the data record.”

Such arguments are considered ridiculous by 98% of climate scientists, but it should be obvious why coal industry executives like McCutcheon are interested in giving them air time. Regardless, the fossil fuel industry is slowly but surely losing its battle against science. From the President’s decision to link Keystone XL pipeline approval with its carbon emissions, to the recently announced EPA greenhouse gas rules and the release of the latest Intergovernmental Panel on Climate Change report – the writing is on the wall.

Climate science is getting even more robust and conclusive. The clean energy industry is taking off. The movement against fossil fuels is gaining strength in some unlikely quarters.

What does this mean to Shaun McCutcheon, smart businessman? It means the price of bribery is going up, and he needs to be able to meet that price. The total amount of money spent at the Federal level in the 2012 election by the top fossil fuel industry donors who would benefit the most from the removal of aggregate campaign finance limits was $11,504,213. If Shaun McCutcheon gets his way, these oil, coal, and gas industry executives could collectively give $312,455,200 in the next election[1]. That’s a 2600% increase. Piles of money like that, which the fossil fuel industry remains in a good position to provide, has a way of muddying the waters in Washington.

Take for example the Koch brothers and their wives, who between them spent $451,398 in the last election (much more if you consider superpacs and other shady avenues, but we’ll ignore that for now). If McCutcheon succeeds, the Koch brothers would be further unleashed to contribute up to $14,532,800 in the next election.

Because of this cash onslaught and the credible threat of more, virtually all Republicans and most Democrats are either bought or cowed into supporting an “All of the Above” (née Drill Baby Drill) energy policy that favors domestic drilling. The words “climate change” were not heard in the Presidential debates for the first time since 1984. But despite these facts and ongoing attacks on the Clean Air Act, irrational defense of industry subsidies, promotion of expanding oil and gas infrastructure, gas fracking, and coal export proposals — the movement for clean energy and against fossil fuels has never been stronger in the U.S.

Power, Alinsky famously observed, comes from only two places – money and people. Many, many more people are waking up to the threat posed by climate change and by expanding fossil fuel infrastructure in their backyards.

It makes sense that the fossil fuel industry is desperate to find more ways to bring more money to bear – it’s really their only play. But the price of bribery is going up, and Shaun McCutcheon — businessman, coal baron, and climate denier — is preparing to pay it.

[1] All campaign finance analysis performed using Public Campaign’s list of top donors and the DirtyEnergyMoney.com database which is based on data from the Center for Responsive Politics with further analysis from Oil Change International.

]]>http://priceofoil.org/2013/10/03/coal-cash-climate-denial-fuels-citizens-united-2/feed/0Oil’s new supply boom is a bust for the climatehttp://priceofoil.org/2012/10/25/oils-new-supply-boom-is-a-bust-for-the-climate/
http://priceofoil.org/2012/10/25/oils-new-supply-boom-is-a-bust-for-the-climate/#commentsThu, 25 Oct 2012 12:00:08 +0000http://priceofoil.org/?p=12762What if you knew that smoking that one last packet of cigarettes was going to give you cancer? Imagine if our understanding of cancer was so precise as to allow doctors to predict with virtual certainty that smoking that particular pack, which you just picked up at the corner store, would definitely be the last...Continue reading 'Oil’s new supply boom is a bust for the climate'.

]]>What if you knew that smoking that one last packet of cigarettes was going to give you cancer? Imagine if our understanding of cancer was so precise as to allow doctors to predict with virtual certainty that smoking that particular pack, which you just picked up at the corner store, would definitely be the last straw and cause you to contract life-threatening cancer? Obviously, you would not smoke that pack.

In the world today, global warming is our collective cancer, and despite dire and clear warnings, the oil industry is still smoking away. The best climate science in the world tells us that in order to avoid the worst impacts of climate change, we need to limit global warming to no more than 2 degrees Celsius. But the amount of new oil production the industry is bringing online over the next eight years is exponentially more than we can afford to burn and stay under two degrees. We simply cannot afford to burn all the oil that the industry is capable of producing over the next few years, and in the long term.

It is worth noting that this is a new equation that reaches essentially the same conclusion as the Carbon Tracker / Bill McKibben Math, but by using the actual plans of the industry itself rather than estimates of fuels in the ground. Carbon Tracker measured the total amount of carbon in fossil fuels in existing reserves (2,795 gigatons) and found them to be five times more than can be safely burned (565 gigatons). That is terrifying, although this does not tell us along what timeline those reserves will be pulled out of the ground.

In this case, we are looking at what the oil industry is building or is expected to build in the next eight years (110.6 million barrels per day of oil production capacity), and comparing it to what experts agree that our oil usage needs to be in just the next eight years if we are to avoid climate disaster (88.1 million barrels per day). In short, what this new analysis tells us is that the oil industry is in fact developing more than enough oil over the next 8 years to lock in climate chaos.

Oil’s New Supply Boom

In June 2012, a paper from the Harvard Kennedy School’s Belfer Center for Science and International Affairs shook the energy policy world. The paper was titled Oil: The Next Revolution.

In the paper, Leonardi Maugeri, a former executive at Italian oil giant ENI and fellow of the Belfer Center’s Geopolitics of Energy Project, detailed the astounding level of investment and activity going on in the global oil industry today.

Maugeri conducted a unique field-by-field analysis of the major oil projects proposed and under construction in most of the world’s oil producing zones. He concluded that just less than 50 million barrels per day (b/d) of oil production capacity is potentially under development through to 2020. He adjusted this down to 28.6 million b/d after factoring risks that would prevent some of these projects materializing.

When factoring in the decline in production from currently producing fields he concluded that by 2020 global oil production capacitycould reach 110.6 million b/d (See Figure 1).

The United States and Canada are at the forefront of this oil boom. Triggered by high global oil prices, the development of technology to access unconventional oil resources in these countries is a significant factor in the global oil boom. Canada’s tar sands and America’s tight oil, obtained through hydraulic fracturing (fracking) and horizontal drilling, are the new heavyweights in North American oil production.

Maugeri’s analysis has U.S. production growing by 3.5 million b/d by 2020, to 11.6 million b/d[1]; this factors-in infrastructural constraints on development and decline in existing fields. He forecasts Canadian oil production, led by tar sands production and tight oil, growing 2.2 million b/d to 5.5 million b/d. See Table. So the U.S. and Canada alone could be contributing 32% of the world’s oil production growth over the next 8 years.

Table 1: Maugeri forecast for global oil and NGL production capacity in 2020 in million barrels per day

Maugeri’s analysis indicates that the global oil industry, with North America leading the charge, is currently investing in an energy production scenario that guarantees global climate chaos.

Finally, it should be noted that Maugeri’s analysis of the industry’s growth is by no means the most aggressive. Citigroup, for one, has a much more bullish scenario for the North American oil industry that has been widely cited, including by both U.S. Presidential campaigns.

If we use the 2011 IEA scenarios as a benchmark, the difference between the oil production capacity that the industry is currently planning for 2020 and where oil demand must be to constrain climate change is a staggering 22.5 million barrels per day.

Therefore, 79% of the oil production capacity being planned today for 2020 is over and above the safe level of global oil demand in that year.

Scenario

Oil Use

Predicted Average Global Warming

2010 Global Oil Demand

86.7 million b/d

0.8 degrees C (actual)

2020 – IEA Current Policies (path we are on)

94.6 million b/d

6 degrees C

2020 – IEA 450 (path we need to get on)

88.1 million b/d

2 degrees C

2020- Maugeri forecast oil production capacity

110.6 million b/d

>8 degrees C?

Perhaps even more worrying is the fact that the IEA Current Policies Scenario is in line with a rise in global temperatures of 6oC. This is commonly considered to herald an unlivable planet. Even under this disastrous scenario the industry’s current objectives represent an excess of 16 million b/d.

Spurred on by rising oil prices since 2003, the global oil industry, with the U.S. and Canada at the forefront, has invested billions of dollars in developing technology to access billions of barrels of previously inaccessible oil. This may have postponed the so-called “peak oil” crisis but it has precipitated a far worse crisis that will be irreversible.

The IEA 2 degree Scenario (also known as the 450 Scenario, which recent science suggests is conservative), states that global oil demand should peak by 2018 and steadily decline thereafter. We are currently not on that trajectory, but investing in and developing capacity to surpass it by over 25% can only guarantee that we will not make it. Instead, the world needs to aggressively invest in oil demand reduction rather than a continued unsustainable binge.

We need to constrain global oil production to within climate limits now, before the oil industry locks us into inevitable climate disaster.

-This post was authored by Lorne Stockman, Steve Kretzmann, and David Turnbull.